Animation producers must do more with less, says TAAFI panel

The gauntlet was thrown by a group of animation industry big wigs Saturday at the inaugural Toronto Animation Arts Festival International, as they challenged their colleagues to up their games in the face of a national and global market fraught with daunting challenges for Canadian animation producers.

“There are going to be fewer shows made, but if they’re going to get made and going to get financed, they have to be sold internationally. The only way to do that is to up the quality,” said 9 Story Entertainment CEO, Vince Commisso.

Commisso was part of an afternoon panel at the Tiff Bell Lightbox, which assessed the current state and the future of the animation industry in Ontario.

For Cookie Jar CEO Hirsh, one of the most pressing issues facing the animation industry is a changing Canadian broadcast landscape.

“The one element I think has changed the most in the last year has been the decline in Canadian license fees – the amount a Canadian broadcaster wants to pay for an animated cartoon,” he explained.

“That’s gone down in my opinion by about 20 to 30 per cent, and at the same time, the amount of money they’re spending in total on Canadian cartoons and original productions has gone down,” he continued.

Hirsh added that the change in attitude isn’t exclusive to broadcasters, arguing that advertisers have also been withdrawing from the kids market over the past couple of years.

This is in turn putting more pressure on Canadian broadcasters, he said, who are required by the CRTC to air homegrown content in a market where consumers are happy to tune into easily accessible American shows.

“We get a lot of American shows here that are made for a large audience with a lot of money,” said Guru president Falcone.

“So the broadcasters are in a position to have to spend money on our shows, and they need to be amazing. [Broadcasters] don’t want okay shows. They want great shows. Otherwise they can pick them up for cheap from the U.S.,” he added.

As the U.S.-Canada TV border has become more permeable, Canadian broadcasters have imported animation giants as additional channels in the country, like Teletoon recently did with Cartoon Network, creating further financing issues for animation producers.

“[Importing American channels] fragments the spread of money through the different broadcasters and impacts the amount of money they have to spend on Canadian production, because that’s a percentage of what they get on their own channel,” said Hirsh.

He added that in such deals, the broadcaster splits its audience with the American networks, resulting in less gross revenue for them to take as a percentage and spend on Canadian cartoons.

The problem of audience and money fragmentation, says Hirsh, is being further compounded by the proliferation of over-the-top services such as Netflix, which, unlike Canadian broadcasters, are not obligated by the CRTC to support Canadian production.

Despite these challenges, Hirsh says he’s hopeful for the future of the animation industry.

“The positive is that it’s going to create opportunity. Whenever there’s this kind of challenge there will be new opportunities for people who figure out the new paradigm,” he said.

Indeed, though the outlook seemed stark, the general consensus among the panelists was that it’s not all doom and gloom for Canadian animation producers, who according to Falcone have seen success in the international market in recent years.

“We’ve gone from making Canadian shows for Canadians, to making shows for the world,” he said.

This international success, argues Commisso, has been buoyed by a domestic environment that has made it easier for Ontario-based producers to get their properties created.

“Technology has come into play in the last 10 to 12 years to lower the cost base of shows. Budgets were 20 or 30 per cent higher in 1999 than they were in 2009,” he said.

“Plus, the way that shows are made now also attracts more tax credits. Our tax credit base is one of the most stable funding sources in the world for Canadian content,” he added.

But Hirsh was quick to point out that even this good news comes with some bad.

“[The value of shows internationally] went soaring high in the 90s as people started new services, but in the last seven or eight years it has declined, which means that the profit margin for people is dramatically down compared to where it would have been in the 90s,” he explained.

He added that the big three American kids companies – Disney, Viacom, and Warner’s – have a stranglehold over the global market which has allowed them to push pricing downward.

Worse still, he argued, is their desire to own everything they do outright, which makes it a challenge to convince them to pick up Canadian shows, and a less profitable route for Canadian animation producers.

The challenge for producers, then, will be to find new paradigms for financing properties, including looking at pre-selling shows to the U.S. and figuring out how to translate them to the multi-platform and interactive realms.

For now, however, the consensus is that producers simply have to learn to do more with less.

“For us to break into the American market, there has to be a window of opportunity,” said George Elliott, president of Elliott Animation.

“That will occur when we have an excellent product that rises above what they have. We have to produce really high end content and look for those opportunities,” he added.